U.S. Shipping tweaks lender, second-lien noteholder plan treatment

By Caroline Salls

Pittsburgh, Sept. 23 - U.S. Shipping Partners, LP filed an amended plan of reorganization Wednesday with the U.S. Bankruptcy Court for the Southern District of New York that changes the proposed distributions for senior secured lenders and second-lien noteholders.

The plan confirmation hearing is scheduled for Oct. 1.

Under the amended plan, the company's senior secured lenders will receive $240 million of new senior secured loans due Aug. 7, 2013, $60 million of new junior secured loans due Aug. 7, 2013, common stock in the reorganized company and warrants to purchase additional common stock.

Foreign holders of senior secured lender claims will receive contingent payment rights, warrants and new stock.

The senior notes will bear interest at a rate of Libor plus 720 basis points, subject to a 2% Libor floor, and the junior notes will bear interest at Libor plus 50 bps, subject to a 2% Libor floor.

Under the terms of the contingent payment rights, once the company's senior secured loans and junior secured loans are repaid in full, reorganized U.S. Shipping will be required to make quarterly distributions to the holders of contingent payment rights equal to the lesser of $2.78 million plus a fee of 4% per year, the amount legally available for the payment as determined by the new board and the amount determined by the new board to be available for the payment after taking into account the cash needed for the company's business.

Under the previous plan, these creditors were slated to receive new junior and senior term notes and all of the company's class A common stock.

Also under the revised plan, second-lien noteholders will receive 45% of the new common stock and common warrants. Under the previous plan, these creditors were slated to receive shares of class B common stock, representing half of the outstanding common stock.

Under the amended plan, the company will issue 20 million shares of common stock, eliminating the class A and class B stock classifications.

Creditor treatment

Creditor treatment will include:

• Holders of senior secured lender claims will receive a combination of new senior and junior loans, new stock and new warrants to purchase stock;

• Holders of the company's second-lien notes will receive shares of common stock and common warrants;

• Holders of existing common units, subordinated units and general partnership interests will receive no distribution;

• Senior secured lenders who are not U.S. citizens will receive a combination of stock, contingent payment rights and warrants to purchase common stock; and

• Second-lien noteholders who are not U.S. citizens will receive a combination of common stock and warrants to purchase common stock.

The warrants will have an exercise price of $0.001 per share and will expire on Dec. 31, 2029.

U.S. Shipping is an Edison, N.J.-based provider of long-haul marine transportation services. It filed for bankruptcy on April 30. Its Chapter 11 case number is 09-12711.

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